Related Federal Cases
Texarkana, Texas – A Texarkana, Texas, doctor and his son have been found guilty of defrauding the U.S. Department of Housing and Urban Development (HUD) through their Texarkana Alzheimer’s Assisted Living facility.
Dr. Rafael Otero, 68, and his son Antonio Otero exploited a HUD-insured mortgage program designed to provide affordable housing for those suffering from diseases like Alzheimer’s. The program provided a favorable interest rate and did not require the owners of Magnolia to take personal responsibility for the loan in the event of a default. Instead, HUD would suffer the financial loss in the event that Magnolia defaulted on the loan.
In order to secure millions of dollars in necessary funding, the Oteros obtained a loan that was insured by HUD. Instead of paying the HUD-insured loan, and in violation of the regulatory agreement they signed with HUD, the Oteros took hundreds of thousands of dollars from Magnolia. Dr. Otero received more than $150,000 from Magnolia in unauthorized compensation and other payments. Antonio Otero took even more money from Magnolia, using it to pay for $3,952 of camera equipment, a $3,247 watch, $2,520 in landscaping for his personal residence, a $27,408 personal mortgage payment, a $12,750 down payment on a personal vehicle, and $1,540 tickets to the Dallas Cowboys.
Under federal statutes, Dr. Otero faces up to one year in federal prison at sentencing. The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.
Antonio Otero pleaded guilty to equity skimming on October 28, 2019, and was sentenced on June 2, 2020, to 46 months in prison by U.S. District Judge Robert W. Schroeder III. Judge Schroeder also ordered Antonio Otero to pay $2 million in restitution to HUD.
The case was investigated by the United States Department of Housing and Urban Development, Office of Inspector General. The case was prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.
Dr. Otero agreed to pay restitution to HUD. The American taxpayers ultimately suffered a loss of over $3.6 million because of their actions.
Key Facts
- State: Texas
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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